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MC News Matsushita Electric Announces Signing of Agreement on Integration of Healthcare Business through Business Division

OSAKA, Japan--(BUSINESS WIRE)--Matsushita Electric Industrial Co., Ltd. (MEI (NYSE symbol: MC)), best known for its Panasonic brand, today announced that MEI and its consolidated subsidiary Panasonic Shikoku Electronics Co., Ltd. (PSEC) have signed the agreement regarding the transfer of MEI’s healthcare business of Healthcare Business Company to PSEC through business division (see July 26, 2006 press release “Integration of Healthcare Business through Business Division”). Details of the agreement are summarized below.

1. Purpose of business division

By dividing the healthcare business from MEI, and transferring such business to PSEC, MEI aims to establish comprehensive business operations. By generating synergy effects in the relevant businesses, MEI will augment growth strategies and reinforce management structures in the healthcare business on the whole.

2. Outline of the business division

    A. Schedule

(Note: This business division will be conducted through the simplified procedures provided under the Company Law of Japan, by which a resolution of the shareholders' meeting will not be made.)

    B. Method of business division
         MEI will divide a certain part of its business and PSEC will
         succeed the divided business.

    C. Allotment of shares
         PSEC, a wholly-owned subsidiary of MEI, will issue 1 share of
         its common stock and allot it to MEI.

    D. Handling of stock acquisition rights
         The stock acquisition rights of PSEC shall not be delivered
         to the holders of the stock acquisition rights of MEI.

    E. Overview of Accounting Procedure
         This business division falls under the category of the
         transactions made under the common control in the
         classification of accounting for business combinations, and
         MEI will not record any profit or loss in respect of this
         transaction. In addition, no goodwill will appear on the
         balance sheet as a result of the business division.

    F. Rights and obligations to be succeeded
         Rights and obligations such as the assets and liabilities
         with respect to the business to be divided and transferred,
         which are considered to be necessary for PSEC to operate the
         business to be succeeded, excluding those rights and
         obligations with respect to the manufacture and sale business
         of ultrasonic diagnostic imaging equipment, probes and
         hearing aids for which MEI has obtained approval or
         certification by the end of March 2007 in accordance with the
         Pharmaceutical Affairs Law of Japan.

    G. Prospects of paying debt obligations
         MEI believes that both MEI and PSEC can pay the debt
         obligations incurred as a result of the business division and
         transfer.

    H. Capitals to decrease as a result of the business division
         None

3. Basic information of MEI and PSEC (non-consolidated basis)

Note: Amounts less than one million yen have been rounded to the nearest whole million yen amount. (hereinafter the same)

4. Description of the business to be divided

    A. Business to be divided

        Sale of blood glucose monitoring systems; development,
        manufacture and sale of ultrasonic diagnostic imaging
        equipment, hearing aids and other healthcare equipment.

  B. Operating results of the business to be divided for the year ending March 31, 2006

    C. Assets and liabilities of the business to be divided as of March 31, 2007 (forecast)

5. Effects of business division on MEI’s financial results

Disclaimer Regarding Forward-Looking Statements

This press release includes forward-looking statements (within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934) about Matsushita and its Group companies (the Matsushita Group). To the extent that statements in this press release do not relate to historical or current facts, they constitute forward-looking statements. These forward-looking statements are based on the current assumptions and beliefs of the Matsushita Group in light of the information currently available to it, and involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors may cause the Matsushita Group's actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. Matsushita undertakes no obligation to publicly update any forward-looking statements after the date of this press release. Investors are advised to consult any further disclosures by Matsushita in its subsequent filings with the U.S. Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934.

The risks, uncertainties and other factors referred to above include, but are not limited to, economic conditions, particularly consumer spending and corporate capital expenditures in the United States, Europe, Japan, China and other Asian countries; volatility in demand for electronic equipment and components from business and industrial customers, as well as consumers in many product and geographical markets; currency rate fluctuations, notably between the yen, the U.S. dollar, the euro, the Chinese yuan, Asian currencies and other currencies in which the Matsushita Group operates businesses, or in which assets and liabilities of the Matsushita Group are denominated; the ability of the Matsushita Group to respond to rapid technological changes and changing consumer preferences with timely and cost-effective introductions of new products in markets that are highly competitive in terms of both price and technology; the ability of the Matsushita Group to achieve its business objectives through joint ventures and other collaborative agreements with other companies; the ability of the Matsushita Group to maintain competitive strength in many product and geographical areas; the possibility of incurring expenses resulting from any defects in products or services of the Matsushita Group; the possibility that the Matsushita Group may face intellectual property infringement claims by third parties; current and potential, direct and indirect restrictions imposed by other countries over trade, manufacturing, labor and operations; fluctuations in market prices of securities and other assets in which the Matsushita Group has holdings or changes in valuation of long-lived assets, including property, plant and equipment and goodwill, and deferred tax assets; future changes or revisions to accounting policies or accounting rules; as well as natural disasters including earthquakes and other events that may negatively impact business activities of the Matsushita Group. The factors listed above are not all-inclusive and further information is contained in Matsushita’s latest annual report on Form 20-F, which is on file with the U.S. Securities and Exchange Commission.